QROPS is a term that essentially means “qualifying recognised overseas pension scheme”. It’s what HMRC recognises as those who are eligible to transfer a pension from the UK. If you want to qualify for this, then you have to make sure that you meet all of the requirements that have been by set by UK law. If you want to make sure that your pension is QROPS then it helps to check the list of schemes that HMRC have posted so that you can get the best result out of your pension overall.
So why would you think about having a QROPS? If you live overseas or if you are thinking about moving abroad then you might want to think about transferring. You may want your pension to be in the country so that when you retire, you are not receiving your income in pounds. You might also find it way easier to keep track of any tax or regulation changes if they happen to be in a country that you reside in. In any case, it is a good idea to chat with an expert as they can then talk to you about the benefits that are available and they can also help you to know if the pension that you have right now is QROPs too.
It’s important to know that when it comes to pension transfer, the advice you get will depend on your country of residence. QROPS can be subject to tax charges as well. If you were to transfer to an overseas pension that is not QROPS then you would be classed as making a payment that is not authorised and this could mean that you end up paying a tax charge of over 55%. You also have the possibility of facing additional charges on top of this as well.
When does the Charge Apply?
If you are concerned that you are going to have to pay a charge then you should know that the 25% charge is not always going to apply. A transfer to QROPS will incur a 25% transfer charge but there are ways for you to try and get around this. You can formally request your pension to be transferred so that you can avoid the unauthorised charge, for example. If you want to avoid further charges then you need to be a resident in the country where the QROPS is going to be based. You can also be a resident of the EEA.
Of course, if you are unsure about whether or not you are going to be getting the best result out of your pension or not then one way for you to find out everything you need to know would be for you to contact a financial advisor. When you do, they can then help you to get the support you need and they can also talk with you about any changes that you might have to make along the way as well.